Ignore the doom merchants, Britain should get fracking

And according to Herr Leinan, neither of us knows what we are getting ourselves into. We are about to release the pent-up shale gas of Britain from its sinister cavities beneath Lancashire and Sussex, and anything can happen. Before we touch the integuments of the planet, he says, the European parliament will produce some regulations to “discipline” the operation.

Regulations? From the Euro-parliament? And these people wonder why we in Britain are increasingly determined to have a referendum on our membership of the EU. I am sure that the SPD politician means well, but just what in the name of hell has it got to do with him? Before he draws up any regulations for the British fracking market, he might care to look at what has been going on in America in the past four years, where the discovery of large quantities of shale gas is turning into one of the most significant political events since the end of the Cold War.

In 2008 the cost of natural gas in the US was $8 a unit. It is now $3 a unit. In China it is still up at $12 a unit – and the result is that the US is now competitive in industries such as fertilisers and chemicals that American politicians had long since assumed were lost to low-cost economies of the East. As a result of the use of gas, the Americans have cut their CO2 emissions to levels not seen since the Nineties, in spite of a growing population.

Indeed, the Americans have now actually met their obligations under the Kyoto protocol on climate change – and they never even signed up for it. The shale gas industry is a huge employer, and has so far contributed $50 billion in tax. As for the anxieties about water poisoning or a murrain on the cattle, there have been 125,000 fracks in the US, and not a single complaint to the Environmental Protection Agency.

It is no wonder that some of the more heroic spirits in the Coalition Government are saying that we should get our act together, and make use of what nature has bestowed on Lancashire and elsewhere. As soon as he became Environment Secretary, Owen Paterson announced that he was going to make life easy for potential frackers, with a one-stop permit system. He has the support of George Osborne, who hailed the potential of fracking in the Autumn Statement.

Alas, we are in a Coalition, and the Liberals run the Department of Energy and Climate Change. They have announced a moratorium on fracking, claiming that there have been earthquakes in the Blackpool area – even though there are tiny quakes every day. In what they thought was a cunning move, the Lib Dems also leaked the location of two big reserves of shale gas – in Tatton and Shropshire North. Much to his credit, Owen Paterson immediately announced that he was all in favour of fracking his constituency if it would deliver jobs and growth, and he is dead right. The shale gas discovery is hateful to the Libs and the Greens, because it destroys their narrative about the ever rising cost of hydrocarbons. It is glorious news for humanity. It doesn’t need the subsidy of wind power. I don’t know whether it will work in Britain, but we should get fracking right away.

4 thoughts on “Ignore the doom merchants, Britain should get fracking”

Some more realistic economic views from Oxford University is that “the old model of IPO and venture capital funding and Angels are coming to an end, as it is much harder to raise funds this way now than 4 years ago. Partnering between universities and corporations examples with Rolls Royce, BAE are emerging. All the fate of the innovative business project is in the hand of industrial partner, universities do not manufacture or trade….Sloan Review from MIT is a good study. Large companies are big beneficiaries right now.http://www.podcasts.ox.ac.uk/financing-technology-start-ups-open-and-closed-innovation-audio

Britain was the leader in the Industrial Revolution because of coal and its exploitation. In the second industrial revolution in 1900 it was the USA with petroleum. Cheap energy, innovation and hard work were the keys driven by very low income tax.

P.S. Absence of market discipline is the essence of the innovation economy process. Contrary to central dogma of neoclassic economy, efficiency is not the virtue of market economy when growth is driven by the creative destruction as identified by Schumpeter to be the engine of economic growth. The prime virtue is the ability to tolerate the unavoidable waste that accompanies – to support new networks, to preserve continuity in market economy when bubble bursts.

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